Compatibility and pricing with indirect network effects
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Compatibility and pricing with indirect network effects evidence from atms by Christopher R. Knittel

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Published by National Bureau of Economic Research in Cambridge, MA .
Written in English

Subjects:

  • Automated tellers -- Economic aspects -- Econometric models.

Book details:

Edition Notes

StatementChristopher R. Knittel, Victor Stango.
SeriesNBER working paper series ;, working paper 10774, Working paper series (National Bureau of Economic Research : Online) ;, working paper no. 10774.
ContributionsStango, Victor., National Bureau of Economic Research.
Classifications
LC ClassificationsHB1
The Physical Object
FormatElectronic resource
ID Numbers
Open LibraryOL3476371M
LC Control Number2005615853

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Incompatibility in markets with indirect network effects can affect prices if consumers value "mix and match" combinations of complementary network components. In this paper, we examine the effects of incompatibility using data from a classic market with indirect . Downloadable! Incompatibility in markets with indirect network effects can affect prices if consumers value "mix and match" combinations of complementary network components. In this paper, we examine the effects of incompatibility using data from a classic market with indirect network effects: Automated Teller Machines (ATMs). Our sample covers a period during which higher ATM fees increased. Christopher R. Knittel & Victor Stango, "Compatibility and pricing with indirect network effects: evidence from ATMs," Working Paper Series WP, Federal Reserve Bank of Chicago, revised Christopher R. Knittel & Victor Stango, "Compatibility and Pricing with Indirect Network Effects: Evidence from ATMs," NBER Working Papers , National Bureau of Economic Cited by: cantly higher if product characteristics enable compatibility and therefore generate network effects (Gröhn , ). Focussing on optimal pricing in network effect markets two strategies have been distinguished in the literature. Per-sonal price differentiation means that network effect goods.

With indirect network effects, the value of the service increases for one user group when a new user of a different user group joins the network. Cost-benefit analysis of joining a network. Joining a network has a cost. In some cases, to join a network a user must buy hardware, such as the telephone. Even today, digital platforms require smart. THE ECONOMY WITHOUT NETWORK EFFECTS 0 1 r(1) r(0) Price Consumers p* y = r(x) constant cost per unit p* equilibrium quantity x* Figure When copies of a good can be produced at a constant cost p∗ per unit, the equilibrium quantity consumed will be the number x∗ for which r(x∗)=p∗. of the good at a constant cost of p∗ implies that the price cannot remain above p. I complement this previous literature by investigating the relationship between collusion and firms’ incentives to introduce compatibility in a market with network effects. In industries with network effects, customers benefit from a larger network, i.e., from the larger number of Cited by: 1.   In many cases, one may think of indirect network effects as a one-directional version of two-sided network effects. This is the type of Network Effect that defines Marketplaces such as Airbnb.

The Network Effect: a practical guide to making- and keeping- the connections that can make your world go round - Kindle edition by Newton, Tony, Perle, Judith. Download it once and read it on your Kindle device, PC, phones or tablets. Use features like bookmarks, note taking and highlighting while reading The Network Effect: a practical guide to making- and keeping- the connections that can /5(6). Indirect network effects: Network effects may also be indirect, where increased in usage of the product spawns the production of increasingly valuable complementary goods, and this results in an increase in the value of the original product. For instance, while there are some direct network effects associated with Windows (arising out of file. So network goods with indirect network effects, therefore have to be consumed together with other products. These network goods, therefore, are complements and as a consumer, you're not looking at a single product out of those systems but you're looking for the entire system.   The 2nd broad category of nfx, 2-sided nfx, are often called “indirect network effects” in academic literature. However, we think this is misleading since 2-sided networks can involve both Author: NFX.